Copyright Infringement: Background Music Embedded in Popular YouTube Videos

Gone are the days when only major studios had a monopoly on manufacturing “celebrities.” YouTube has ushered in a new category – the self-made “celebrity YouTuber.” Michelle Phan is an extremely popular YouTuber who is well known for her entertaining videos on how to put on different types of makeup. She currently has more than eight million subscribers, and her popular “Barbie Transformation Tutorial” video has over sixty million views. A far cry from Gangnam’s two billion views, but impressive nonetheless. Ms. Phan generates revenue by monetizing her videos and endorsing various products in her videos. And just like other famous YouTubers, she uses popular copyrighted songs as background music in her videos that are distributed to millions via YouTube.

In July 2014, Ultra Records, LLC (“Ultra”) brought a copyright infringement suit against Ms. Phan in the U.S. District Court, Central District of California. Ultra alleged that Ms. Phan had engaged in a “wholesale infringement” of Ultra’s musical compositions and recordings, citing 50 instances of Ms. Phan’s direct copyright infringement. Ultra further stated that Ms. Phan had profited from using its artists’ tracks and compilations. Consequently, Ultra sought $150,000 in statutory damages for each instance of copyright infringement, and demanded an injunction against Ms. Phan’s continued use of its copyrighted material.

Ms. Phan counterclaimed alleging that Ultra had approached her to have its music featured in her videos to reach her millions of subscribers. Apparently, despite the license, Ultra took down Ms. Phan’s allegedly infringing video on YouTube. Consequently, Ms. Phan claimed that Ultra breached the license agreement and interfered with her relationship with YouTube. Later in August 2015, the parties settled the dispute out of court. The settlement terms have not been disclosed.

Even though the parties settled, this case serves as a cautionary tale to famous YouTubers who freely incorporate background music into their videos. Currently, copyright owners can register their copyrighted works in YouTube’s Content ID system. Content ID flags videos that contain songs that match any copyrighted song in the Content ID database. YouTube provides the owner several options on what to do about the infringing video, including muting the audio, running ads on the video, tracking views on the video, or blocking the video entirely. Ultra blocked Ms. Phan’s video but still sued her for copyright infringement, most likely because she is a celebrity with deep pockets. Notwithstanding Youtube’s copyright owner options, Ultra was well within its rights to sue Ms. Phan for copyright infringement.

YouTubers should take affirmative steps to avoid copyright infringement. Owners of musical compositions and recordings have the exclusive right, among other things, to distribute copies of recordings to the public, and to perform the recordings publicly by means of digital audio transmissions. Posting videos containing unauthorized copyrighted songs could result in serious consequences for the YouTuber, including civil and criminal sanctions. Therefore, YouTubers should obtain licenses from copyright owners directly, or indirectly though music licensing agencies, for example, BMI and ASCAP, who offer licenses on behalf of owners. YouTubers should also explore royalty-free songs available for licensing from the owners. However, YouTubers who use their videos to parody, criticize, or report on copyrighted music may not need the owner’s permission because such use constitutes “fair use.”